Underwriters, Residential Fail To Boot MBS Suit

Law360, New York (April 28, 2011, 8:37 PM ET) -- A New York federal judge on Thursday greenlighted part of a putative class action claiming that mortgage-backed securities sold by Residential Capital LLC and underwritten by Goldman Sachs Group Inc. contained lies in their offering statements.

The drop in the MBS' value when they went from investment-grade to junk status is a cognizable loss, and claims under Section 11 of the Securities Act of 1933 therefore can go forward, U.S. District Judge Harold Baer said.

“These allegations of injury are sufficient at the pleading stage,” he...
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